“You didn’t build that: 332. I build that: 206,” Gross, whose notes usually have a high degree of political commentary, began, in a reference to the Electoral College results of last month’s U.S. election.
“Well, I guess that settles it: You didn’t build that after all. Or maybe you did, but not all of it. […] Whatever. Rather than an economic mandate, November’s election was more of social commentary on the Republicans’ habit of living with eyes closed,” Gross wrote, later complaining the election had done little to settle the question of “Why is it so hard to be someone these days, to pay for college, get a good-paying job and retire comfortably?”
The rest of Gross’ letter, titled “Strawberry Fields – Forever?” in an extended reference to a Beatles song, tried to answer that question, essentially concluding that we are in the Biblical equivalent of seven years of lean due to high sovereign debt loads, the slowdown in the euphoric growth in the earlier stages of globalization, disruptive technological change and demographics.
The “developed world’s growth binge has been decades in the making. We may need at least a decade for the healing,” Gross wrote.
Gross is no stranger to deeply pessimistic pronouncements on the state of American society. In his note last month, most of which was dedicated to what he saw as a “farcical” election, he suggested Americans should express their discontent by pledging allegiance “to the flag of the fragmented state of America, and to the plutocracy for which now it stands, a red and blue nation, under financial gods indistinguishable, with liberty and justice for the 1 percent.”
And Gross’ firm has for years been arguing that the financial crisis reset potential economic growth to a “New Normal” that should “lower your expectation of future asset returns … for a long, long time.”
Yet it was still a dour view from a man who, as manager of a $285 billion fund that has returned 11.4% over the last 12 months, mainly by betting on mortgages and long-term Treasuries, is a force to be reckoned with on Wall Street.
After dropping over half a percentage point earlier in the day, the S&P 500 Index of U.S. equities was mostly flat for the day, ending down 0.17 percent from the previous day’s close.